FDIC and FSA Sign Agreement To Increase Cooperative Cross-Border Framework For Emergency Planning And Action

Originally published July 8, 2008

Keywords: FDIC, Financial Services

Authority, FSA, memorandum of understanding, MOU, cross-border

banking, insured depository institutions, financial

services.

The Federal Deposit Insurance Corporation (FDIC) and the

United Kingdom's Financial Services Authority (FSA) signed

a memorandum of understanding (MOU) on June 25, 2008, providing

for increased information-sharing and coordinated regulatory

efforts to address future emergency situations in connection

with cross-border banking activities. Although previous MOUs

laid the groundwork for general cross-border communication and

cooperation, this new agreement's creation of a cooperative

framework for coordinated cross-border action and contingency

planning in emergency situations represents a departure from

past cooperative supervisory efforts.

The MOU identifies the need to strengthen communication in

connection with cross-border banking operations and to

harmonize supervisory efforts to resolve the effects of

troubled insured depository institutions and other financial

services firms operating in both the United States and the

United Kingdom. Central to this commitment is joint

before-the-fact preparation to establish optimal procedures to

identify emergency situations and assure effective

implementation of resolution strategies.

Through periodic and ad hoc consultations, the FDIC and the

FSA propose to exchange information relevant to the financial

and operational well-being of cross-border firms. This

information may include a firm's capital structure,

liquidity, internal controls and procedures, market ratings

information, and confidential supervisory information. In

addition, in an effort to avert systemic crisis, the two

authorities intend to enhance cooperation in planning for and

analyzing potential resolution scenarios. Crisis management

resolutions reached by the FDIC and the FSA may involve

supervisory action, applications for judicial action, formal

administrative proceedings, conservatorship, receivership,

liquidation, establishment of a bridge bank, and facilitation

of the sale or merger of a troubled firm.

In a previous MOU executed in 1996, the FSA, FDIC, Office of

the Comptroller of the Currency, and Board of Governors of the

Federal Reserve System (the "Board") agreed to share

supervisory information relating to cross-border financial

institutions. Previous cooperative activities between US and UK

authorities, however, were more limited...

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